2013 (11) TMI 219 - AT - Income Tax

Opening of assessment u/s 153C of the Income tax act Held that - Reliance has been placed upon the judgment of the Co-ordinate bench of Tribunal, Bangalore in the case of DCIT vs. United Spirits Ltd., Bangalore 2013 (11) TMI 75 - ITAT BANGALORE wherein it was held that no material belonging to the assessee was found which authorized the Assessing Officer to initiate the proceedings under sec. 153C of the Act On reading of s. 153C of the Act, it is crystal clear that where the assessing officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs to belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the assessing officer having jurisdiction over such other person and that assessing officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. In the abovementioned case, no books of account nor any incriminate documents pertaining to the appellant were seized when a search was conducted in the residential premises of Sri Miglani and that no books of account or documents or assets seized or requisitioned were handed over to the assessing officer having jurisdiction over the appellant - Thus, the AO, was not within his realm for initiation of proceedings u/s 153A r.w.s. 153C of the Act in the case of the appellant. Query that UPDA is a society where all the assessees are members. According to the principle of mutuality, why the details prepared by the Secretary of the Society be not construed as belonging to all the members of the society. To this query, it was contended by the learned counsel for the assessee that UPDA is an independent taxable entity. It is not a members club and not a mutual benefit society. It is constituted under a separate Memorandum of Association. The Memorandum of Association does not provide that excess of the income shall be paid or transferred directly or indirectly to the members of the society. It also does not provide that on dissolution of the society, assets of the society shall be distributed among the members of the society. Any thing belong to the society can not be said to be belonged to the members. All these amounts have been taxed in the hands of UPDA also. The assessees have their independent status as a company other than the members of a society. On an analysis of above submission, no any merit in the contention of Learned DR that considering the position of Shri Miglani as Secretary of UPDA. The document should be construed as belonged to assessee. Respectfully following the order of the ITAT, Bangalore, allowed the preliminary grounds raised by the assessee that no documents belonging to the assessee were found and, therefore, no assessment under sec. 153C of the Act can be framed in their cases. Consequently, all the assessment orders are quashed.

Issues Involved:
1. Validity of the assessment cancellation by CIT (A).
2. Right to cross-examine Mr. R.K. Miglani.
3. Jurisdiction of the CIT (A) in completing the assessment.
4. Disallowances in assessment proceedings u/s 153C/A.
5. Book Profits assessment u/s 115JA.
6. Provision for interest payable as per Allahabad High Court order.
7. Profit from power plants and its taxability u/s 115JA.
8. Computation of interest u/s 234A.
9. Computation of interest u/s 234B.
10. Credit of tax paid by the appellant.

Issue-wise Detailed Analysis:

1. Validity of the assessment cancellation by CIT (A):
The sole effective ground taken by the Department was that the CIT (A) erred in canceling the assessment. The Tribunal found that the CIT (A) correctly followed the order dated 23.11.2012 in 'National Industrial Corporation Ltd.' and thirty other connected matters, which held that documents seized from Mr. R.K. Miglani's residence did not belong to the members of UPDA, including the present assessee. Therefore, the CIT (A) was justified in canceling the assessment.

2. Right to cross-examine Mr. R.K. Miglani:
The assessee contended that they were entitled to cross-examine Mr. R.K. Miglani, whose statement was relied upon by the Assessing Officer. However, this issue was not elaborately discussed in the judgment as the primary focus was on the validity of the assessment cancellation.

3. Jurisdiction of the CIT (A) in completing the assessment:
The assessee argued that the CIT (A) erred in assuming jurisdiction and completing the assessment when no addition was made based on documents found during the search. The Tribunal upheld the CIT (A)'s decision, noting that the documents seized did not belong to the assessee, thus invalidating the jurisdiction for assessment under section 153C.

4. Disallowances in assessment proceedings u/s 153C/A:
The assessee claimed that disallowances liable to be made in regular assessment could not be made in the assessment proceedings u/s 153C/A, especially when no incriminating documents were found. The Tribunal supported this view, emphasizing that no documents belonging to the assessee were found during the search, which invalidated the assessments under section 153C.

5. Book Profits assessment u/s 115JA:
The assessee contended that the Book Profits assessed u/s 115JA should have been Rs.37,168/- instead of Rs.12,63,68,811/-. The Tribunal did not specifically address this issue in detail, as the primary focus remained on the validity of the assessment cancellation.

6. Provision for interest payable as per Allahabad High Court order:
The assessee argued that the provision for interest payable as per the Allahabad High Court order on additional levy sugar price and disputed sugar cane price was for ascertained liability and should not be added back under Clause 'c' of Explanation to Second Proviso to Section 115JA(2). The Tribunal did not delve into this issue in detail due to the overarching finding that the assessments under section 153C were invalid.

7. Profit from power plants and its taxability u/s 115JA:
The assessee claimed that profits from power plants amounting to Rs.12,16,88,179/- were derived from the business of power generation and should not be taxed u/s 115JA. The Tribunal did not specifically address this issue due to the primary focus on the invalidity of the assessment under section 153C.

8. Computation of interest u/s 234A:
The assessee contended that the AO should compute interest u/s 234A for 6 months instead of 7 months. This issue was not specifically addressed by the Tribunal, as the main focus was on the invalidation of the assessment under section 153C.

9. Computation of interest u/s 234B:
The assessee argued that interest u/s 234B should be Rs.69,72,939/- instead of Rs.1,44,13,152/-. The Tribunal did not specifically address this issue due to the primary focus on the invalidity of the assessment under section 153C.

10. Credit of tax paid by the appellant:
The assessee claimed that the AO should allow credit for tax of Rs.5,625/- paid by the appellant. This issue was not specifically addressed by the Tribunal, as the main focus was on the invalidation of the assessment under section 153C.

Conclusion:
The Tribunal upheld the CIT (A)'s decision to cancel the assessment, based on the finding that the documents seized from Mr. R.K. Miglani's residence did not belong to the members of UPDA, including the present assessee. Consequently, all the appeals filed by the department were dismissed, and all the cross objections raised by the assessee were rejected as infructuous.

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